Assessing the Readiness of the Chiang Mai Initiative Multilateralization: Can It Effectively Address Future Crises?

This study evaluates the effectiveness of the Chiang Mai Initiative Multilateralization (CMIM) in safeguarding financial stability among members of the Association of Southeast Asian Nations (ASEAN) plus Japan, the People’s Republic of China, and the Republic of Korea—particularly in response to the coronavirus disease pandemic. Despite its intended role as a regional financial safety net, the CMIM has had minimal impact on reducing foreign reserve accumulation and was not activated during the pandemic, raising concerns about its operational viability. Our analysis highlights significant disparities between the region’s ASEAN and non-ASEAN economies, with ASEAN members exhibiting a stronger inclination toward reserve accumulation. While the CMIM may serve as a psychological buffer, its role in mitigating financial instability remains limited. These findings underscore the need for a comprehensive reassessment of the CMIM’s structural framework, operational mechanisms, and overall effectiveness in addressing future crises. This study is among the first to provide an empirical evaluation of the performance of the CMIM during a global crisis and presents policy recommendations to enhance regional financial cooperation and crisis responses in Asia.